Documents and Data: Responsible Retention and Defensible Destruction

By Lisa D. Sparks

Although businesses generate and use far less paper today than they did in the past, they continue to generate, transmit, receive, and store swelling volumes of information. Developing and implementing a clear and consistent policy for managing all of this data is an important, but often overlooked strategy for keeping your enterprise running smoothly. Employees should not be left guessing about what to save, what to store, and what to discard in day-to-day operations.

There is no one-size-fits-all boilerplate document retention policy that will adequately protect your business. Rather, a well-crafted policy will consider your industry, business size, document and record types, potential exposure to litigation, and information technology resources. Even within an organization, certain departments may warrant sub-policies to address specific types of information, including tax documents, human resources files, and public filings. Businesses operating in heavily regulated industries, like food and drug, defense contracting, healthcare, services to minors, and finance, may need to comply with state and federal baseline requirements for securing and maintaining sensitive data and should start with those mandates as a framework.

Common provisions for an organizational policy range from definitions and time periods, to record-keeping and enforcement. You will want to define what qualifies as a covered record and perhaps designate various categories of documents and records to be treated variably. Covered material will certainly include paper documents, emails, and various electronic file types, but may also extend to voicemails, instant messages, cell phone records, web-browsing history, and social media posts. If particular paper files or servers are dumped, a notation should be made to document what was destroyed, how it was destroyed, and why it was destroyed in compliance with the policy. Regular audits and evaluations of compliance are necessary to ensure consistency and identify needed changes over time. The policy need not be static and should be updated periodically and leave a little room for flexibility where certain documents and data do not fit squarely into a category or timetable. You may consider asking employees to acknowledge and sign copies of the current policy to ensure that they are aware of its contents and understand the possible repercussions of non-compliance for their employment and for the company.

A good document retention policy is as much about preserving what you need as it is about purging what you don’t. It is both costly to maintain large volumes of paper or vast amounts of electronic data and difficult to wade through all of it when searching for something important. If and when litigation should arise, your company should expect to compile and produce a variety of paper documents and electronic records to each opposing party. Your ultimate goal is to be able to gather all that is needed and little that is superfluous, while relying upon your retention policy to explain anything that was previously destroyed. Your attorney will need to review all documents before they are ultimately produced to the other side, so limiting the extraneous material will save some legal expense.

There are two primary considerations for litigation preparedness. First, a routine document retention policy must be reasonable for your size and type of business. This requires a balancing between risk management and space and information technology resources. The policy must also be followed and enforced consistently for it to be defensible. Second, a litigation hold will arise, by direction of an adversary in a demand letter, or voluntarily whenever you reasonably anticipate litigation. A litigation hold will suspend the destruction side of the policy such that you are preserving all material that is possibly relevant to the dispute.

Certain types of litigation tend to generate discovery disputes about retention and spoliation of evidence more than others; these include discrimination claims, employment matters, infringement, and products liability. More conservative litigation holds disseminated throughout the organization are in order where careful preservation is necessary because mistaken destruction presents a material a material liability risk. The best practice is to err on the side of preserving more and preserving sooner when litigation may arise. Courts are increasingly willing to impose sanctions on parties who do not act promptly and reasonably during the discovery process, so it is worth the effort to put in place a solid document retention policy to avoid that risk.